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Friday 02 March, 2001

Strategic Rail Auth

ECML Costs & Strategic Agenda

Strategic Rail Authority
2 March 2001


        SRA Resolves ECML Costs and Announces Strategic Agenda Approval

Two important developments affecting the future strategic direction of
Britain's railways were announced by the SRA today.


East Coast Main Line

The Strategic Rail Authority has informed Ministers, and then the two
counterparties for the Intercity East Coast franchise - Virgin/Stagecoach and
GNER - that it has satisfied itself there is no need to continue the pause in
the process of selecting the preferred counterparty for the proposed new
20-year franchise to replace the existing short-term franchise held by GNER.

On 14 February the SRA announced the pause following receipt from Railtrack of
a range of higher cost estimates for the proposed upgrade of the East Coast
Main Line (ECML).  The purpose of the pause was to allow the SRA and its
advisers to examine closely those new estimates, seeking to reassure the SRA
that the upgrade at the heart of the proposed new franchise remained value for
money.

The SRA's Chairman, Sir Alastair Morton, wrote to the Deputy Prime Minister on
Tuesday, 27 February - the day before Wednesday's tragic accident in South
Yorkshire - to report to him on the findings of that examination.  He informed
Mr Prescott that the escalation of the comparable core costs of the upgrade was
less than 20%, with other costs reflecting a range of options unlikely to be
accepted by the SRA and therefore could be excluded from the core project under
consideration.

Adding in those options, said Sir Alastair, 'plus fees and contingencies upon
contingencies' would appear to double last year's estimate.  He cited as an
example the option to spend hundreds of millions north of Newcastle for
marginal increases in capacity to Edinburgh, together with a marginal reduction
in journey time.

Accordingly, the contest between Virgin/Stagecoach and GNER for the new
franchise is now as it was before 14  February.  Early in December, the SRA, as
required under statute, requested the approval of the Deputy Prime Minister for
its confidential recommendation of a preferred counterparty.


Strategic Agenda

The Board of the Strategic Rail Authority yesterday approved the printing and
publication of the SRA's 'Strategic Agenda'.  Once printed, arrangements will
be made for distribution to the media and stakeholders in Britain's railway
system.


                               Important Notice


This news release is issued by the Strategic Rail Authority and its contents
have been approved for the purposes of section 57 of the Financial Services Act
1986 by KPMG Corporate Finance.

KPMG Corporate Finance is a division of KPMG which is authorised to carry on
investment business by the Institute of Chartered Accountants in England and
Wales. This news release has been prepared for general information purposes
only and is not intended to form the basis of any investment decision or
constitute an offer or invitation to bid for any passenger rail franchise or to
acquire shares in a train operating company. Neither this news release nor any
copy of it should be taken into or distributed in Canada, France, Japan or the
United States except in accordance with an applicable exemption. The
distribution of this news release in other jurisdictions may be restricted by
law and therefore persons into whose possession this news release comes should
inform themselves about and observe any such restrictions.

KPMG Corporate Finance is acting for the Strategic Rail Authority  and will not
regard any other person as its client in relation to passenger railway
franchising or be responsible to anyone other than the Strategic Rail Authority
for providing the protections afforded to clients of KPMG Corporate Finance nor
for advising any other person on the contents of this news release or any
matter referred to in it


         Media Enquiries: SRA Press Office 020 7654 6339/ 6294/ 6234

   Latest news and announcements from the SRA can be viewed on our website
                                www.sra.gov.uk



                                                                                
                                                                                
                

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